IOSR Journal of Business and Management (IOSR-JBM) e-issn: 2278-487X, p-issn: 2319-7668 (April, 2017) PP 23-28 www.iosrjournals.org An Analysis of Corporate Social Responsibility Initiatives of Selected Manufacturing Companies in Karnataka Ramaprakasha. N 1 & Dr.Y.Rajaram 2 1 Faculty, Maharaja s College, University of Mysore, Mysuru. 2 Professors, Ramaiah Institute of Management Studies, Bengaluru. Abstract: The enactment of The New Companies Act 2013 is a major milestone in corporate governance, which has resulted in a paradigm shift in business operations across India. Almost all major companies are practicing corporate social responsibility (CSR) and are contributing towards the development of society and environment within which they operate. In the present paper an attempt has been made to throw light on the prominent corporate social responsibility initiatives of the selected manufacturing companies in Karnataka, to determine the trend and orientation of corporate social responsibility and to examine whether there is significant difference in the orientation and implementation of corporate social responsibility initiatives among the selected manufacturing companies in Karnataka. Key words: Corporate social responsibility, Karnataka, Manufacturing companies. I. Introduction Corporate Social Responsibility (CSR) has developed as an important area of management after the enactment of The New Companies Act-2013. CSR is defined as the obligations of a company towards the society and environment within which it operates. CSR was previously a voluntary exercise which were practiced only by a few reputed companies but The New Companies Act which came into force from 01 April, 2014 in India made corporate social responsibility mandatory for companies operating in India having a net profit of Rs 5 crores or above or a net worth of Rs 500 crores or above or a total turnover of Rs 1000 crores or above during any financial year. The companies which come under the ambit of corporate social responsibility would be required to spend mandatorily at least 2% of their average net profits of the immediately preceding 3 years on corporate social responsibility activities. Schedule VII and Section 135 of the New Companies Act- 2013 has enlisted different focus areas of corporate social responsibility under which companies can launch their CSR initiatives to accomplish their social and environmental obligations. Objectives Of The Study The objectives formulated for the present study are as follows, i. To recognize the CSR initiatives of the selected manufacturing companies in Karnataka. ii. To determine the orientation of CSR initiatives of the selected manufacturing companies in Karnataka with regard to various focus areas as prescribed under Schedule VII and section 135 of The New Companies Act-2013. iii. To observe whether there is significant difference in the orientation of CSR initiatives among the selected manufacturing companies in Karnataka with regard to various focus areas. II. Research Hypothesis The null hypothesis and alternative hypothesis formulated for the present study are as follows, H 0 : There is no significant difference in the orientation of CSR initiatives among the selected manufacturing companies in Karnataka with regard to various focus areas. H 1 : There is significant difference in the orientation of CSR initiatives among the selected manufacturing companies in Karnataka with regard to various focus areas. III. Research Methodology The present work is an analytical study of CSR initiatives of selected manufacturing companies in Karnataka. The manufacturing companies headquartered in Karnataka, which were among Dun and Bradstreet s India s Top 500 Companies Report were selected for the present study. Dun and Bradstreet is the leading provider of international and Indian business information and their report is widely accepted worldwide. A total of 14 manufacturing companies from Karnataka figured in Dun and Bradstreet s report and they were selected for the present study. The prominent CSR initiatives launched by the selected manufacturing companies in 23 Page
Karnataka were identified using both primary and secondary sources of data. Primary data were collected by direct interaction method and secondary data were collected through the annual reports, company websites, internet resources, journals, newspapers and magazines. The orientation and implementation of CSR initiatives of the selected manufacturing companies in Karnataka with regard to various focus areas (as per Schedule VII and Section 135 of Companies Act-2013) was then determined and tabulated. If a manufacturing company implemented CSR initiatives in a certain focus area it was coded as 1 and if not it was coded as 0. The coded data was then analyzed using Predictive Analysis Software Statistics 18 (PASW Statistics 18). Cochran s Q test was used to examine whether there is a significant difference in the orientation of CSR initiatives among the selected manufacturing companies in Karnataka with regard to different focus areas. Cochran s Q test is a nonparametric statistical test [1]. It is used to examine the differences between three or more observations having a dichotomous value 0 and 1. IV. Scope Of The Study The scope of the present study is limited to only those 14 manufacturing companies headquartered in Karnataka which were among Dun and Bradstreet s India s Top 500 Companies Report. The study is based on the corporate social responsibility initiatives launched by the selected manufacturing companies in Karnataka during the financial year 2014-2015 and 2015-2016 only. V. Profile Of The Selected Manufacturing Companies In Karnataka Sl.No. TYPE HEADQUARTERS 1 3 M INDIA 2 BHARAT EARTH MOVERS PUBLIC SECTOR UNDERTAKING 3 BHARAT ELECTRONICS PUBLIC SECTOR UNDERTAKING BIOCON 4 5 BOSCH 6 BRITANNIA INDUSTRIES 7 MANGALORE CHEMICALS AND FERTILIZERS 8 MANGALORE REFINERY & PUBLIC SECTOR PETROCHEMICALS UNDERTAKING MANGALURU 9 RAJESH EXPORTS 10 TITAN 11 TTK PRESTIGE 12 UNITED BREWERIES 13 UNITED SPIRITS 14 WEST COAST PAPER MILLS Table 1: Profile of the selected manufacturing companies in Karnataka VI. Analysis Of Corporate Social Responsibility Initiatives Of Selected Manufacturing Companies In Karnataka Schedule VII and Section 135 of The New Companies Act-2013 enacted in India has enlisted 55 focus areas of corporate social responsibility which cover a wide range of social and environmental activities. The 55 focus areas prescribed under Schedule VII and Section 135 of the New Companies Act are tabulated and are as shown below, 24 Page
Sl. No. FOCUS AREAS 1 Eradicating hunger 2 Eradicating poverty 3 Eradicating malnutrition 4 Promoting health care including preventive health care 5 Sanitation 6 Contribution to the Swachh Bharat Kosh set up by the Central Government for the promotion of sanitation 7 Making available safe drinking water 8 Promoting education, including special education 9 Promoting employment enhancing vocation skills especially among children 10 Promoting employment enhancing vocation skills especially among women 11 Promoting employment enhancing vocation skills especially among elderly 12 Promoting employment enhancing vocation skills especially among differently abled 13 Promoting livelihood enhancement projects 14 Promoting gender equality 15 Empowering women 16 Setting up homes and hostels for women 17 Setting up homes and hostels for orphans 18 Setting up old age homes, day care centers, and such other facilities for senior citizens 19 Measures for reducing inequalities faced by socially backward groups 20 Measures for reducing inequalities faced by economically backward groups 21 Ensuring environmental sustainability 22 Ensuring ecological balance 23 Protection of flora 24 Protection of fauna 25 Animal welfare 26 Promoting agro-forestry 27 Conservation of natural resources 28 Maintaining quality of soil 29 Maintaining quality of air 30 Maintaining quality of water 31 Contribution to the Clean Ganga Fund set up by the Central Government for the rejuvenation of the river Ganga 32 Protection of natural heritage 33 Protection of art 34 Protection of culture 35 Restoration of buildings and sites of historical importance 36 Restoration of works of Art 37 Setting up public libraries 38 Promotion and development of traditional arts 39 Promotion and development of traditional handicrafts 40 Measures for the benefits of armed forces veterans 41 Measures for the benefits of armed forces war widows 42 Measures for the benefits of armed forces dependents 43 Training to promote rural sports 44 Training to promote nationally recognized sports 45 Training to promote Paralympics sports 46 Training to promote Olympic sports 47 Contributions to Prime Minister s Relief Fund 48 Contributions to any other fund set up by the Central Government for socio-economic development, relief and welfare of the Scheduled Castes 49 Contributions to any other fund set up by the Central Government for socio-economic development, relief and welfare of Scheduled Tribes 50 Contributions to any other fund set up by the Central Government for socio-economic development, relief and welfare of Other Backward Classes 25 Page
51 Contributions to any other fund set up by the Central Government for socio-economic development, relief and welfare of minorities 52 Contributions to any other fund set up by the Central Government for socio-economic development, relief and welfare of women 53 Contribution or funds provided to Technology incubators located within academic institutions which are approved by the Central Government 54 Rural Development Projects 55 Slum Area Development Table 2: Corporate social responsibility focus areas prescribed under Schedule VII and Section 135 of The New Companies Act-2013 enacted in India. The major focus areas of the selected 14 manufacturing companies in Karnataka under which corporate social responsibility initiatives are launched are tabulated and are shown below, Sl.No. MANUFACTURING MAJOR CSR FOCUS AREAS Promoting education including special education. 1 3M INDIA Social innovation. Disaster relief and rehabilitation. Rehabilitation of persons with disabilities. Ensuring environment sustainability. 2 BHARAT EARTH MOVERS Eradicating malnutrition. Eradicating hunger. Promoting education Rural development 3 BHARAT ELECTRONICS Enhancing vocational skills. Measures for the benefit of armed forces veterans. Ensuring environment sustainability. 4 BIOCON Making available clean drinking water. Environment sustainability. Rural development projects. 5 BOSCH 6 BRITANNIA Eradicating malnutrition. Protection of natural heritage. 7 culture. Promotion of rural sports. Community development projects. Promotion of education. 8 Community development 9 RAJESH EXPORTS MANGALORE CHEMICLES AND FERTILIZERS MANGALORE REFINERIES AND Making available safe drinking water. Promoting health care. PETROCHEMICLES Promotion of natural heritage, arts and Sanitation. 26 Page
Development of Yatri Nivas. Donation to religious events. Promoting gender equality. Promoting employment enhancing vocation 10 TITAN skills. Protection of natural heritage, arts and culture. Promotion of health care Promotion of health care 11 TTK PRESTIGE Promotion of education. Promotion of employment enhancing vocation skills. Ensuring environment sustainability. 12 UNITED BREWARIES Eradicating hunger. Eradicating poverty. Promoting gender equality. Women empowerment. Ensuring environmental sustainability. Disaster management and rehabilitation. 13 UNITED SPIRITS Making available safe drinking water. Eradicating hunger. Protection of natural heritage, arts and culture. Rural development projects. 14 WEST COAST PAPER MILLS Ensuring environment sustainability. Table 3: Major CSR focus areas of selected manufacturing companies in Karnataka VII. Analysis And Interpretation The orientation of CSR initiatives of selected manufacturing companies in Karnataka were examined by using Cochran s Q Test in Predictive Analysis SoftWare-18 (PASW Statistics 18). The results are as shown below, Cochran s Q Test Results Value 0 1 3M INDIA 41 14 BEML 37 18 BEL 41 14 BIOCON 42 13 BOSCH 40 15 BRITANNIA 52 3 MCF 27 28 MRPL 16 39 RAJESH 49 6 TITAN 28 27 TTK 47 8 UBL 42 13 USL 41 14 WCPM 40 15 Table 4: Frequencies of Cochran s Q Test N 55 Cochran's Q 144.402 a df 13 Asymp. Sig..000 Table 5: Cochran s Q Test Statistics 27 Page
The above analysis shows that p-value is highly significant at 0.000 hence the null hypothesis is rejected and alternative hypothesis is accepted. Therefore the analysis reveals that there is significant difference in the orientation of corporate social responsibility initiatives of the selected manufacturing companies in Karnataka. VIII. Conclusion The New Companies Act-2013 has redefined the way in which business operates in India. Companies who were previously focusing on increasing the value of shareholders are now focusing on increasing the value of all stakeholders. The present study identified the prominent corporate social responsibility initiatives launched by the selected manufacturing companies in Karnataka and the analysis revealed that there is significant difference in the orientation and implementation of corporate social responsibility initiatives with regard to the different focus areas, i.e. the selected companies are implementing corporate social responsibility initiatives across diverse focus areas to ensure positive impact on people (social), planet (environmental) and profitability (financial). References Books: [1] Sheskin D J. (2004). Handbook of Parametric and Non-Parametric Statistical Procedures. 3 rd Edition. Boca Raton: Chapman & Hill / CRC Website: [2] Ministry of Corporate Affairs. (2013). Available at http://www.mca.gov.in. 28 Page